Bloomberg/Muhammed Al Muaalemi
The heightened interest is driven mostly by foreign investors who passively track MSCI indexes.
Monday 26, August 2019
Saudi Arabian stocks volumes are expected to surge as the MSCI completes the country’s promotion to emerging-market status as the US-China trade war escalation raise fears about a global recession, reported Bloomberg.
The Kingdom’s weighting on the New York-based company’s MSCI Emerging Markets Index will increase to 2.83 per cent from 1.45 per cent. When the first part of the upgrade took place in May, share trading in the country leapt to almost $8 billion in a single day, the most in almost 13 years.
The purchases from abroad have helped the index in Riyadh deliver more than six times the gains for equities from developing markets this year and could help the index recover amid speculation that slowing growth globally will sap demand for oil, Saudi Arabia’s biggest export.
However, some investors expect that the stronger volumes are unlikely to be sustained, given that the Kingdom’s new status arrives at a time when local stocks are trading at relatively expensive levels against a backdrop of a weak economy and escalating geopolitical tensions.